BREAKING – Mayor Karácsony: the State Treasury withdrew billions from Budapest, paying wages is problematic for bus, metro, tram drivers

The Hungarian State Treasury has “unlawfully” withdrawn more than 10 billion forints (EUR 24.8m) from Budapest’s accounts, and the municipality has halted payments to some municipality-owned companies to preserve liquidity, Gergely Karácsony, the city’s mayor, told a press conference on Thursday.

The companies involved are public utility company Budapest Közművek, transport company BKK and road and street lighting company Budapest Dísz- és Közvilágítási Ltd, Karácsony said.

Karácsony noted that the municipality on Tuesday submitted a request for immediate judicial protection over a dispute concerning the solidarity contribution City Hall is required to pay into the central budget.

Immediate judicial protection should protect city funds until the court has made its decision, so the Treasury’s step “is unlawful as well as immoral because it is putting the capital’s operations at risk,” Karácsony said.

The municipality’s “most important aim in the coming months and weeks” will be to pay the net wages of 27,000 employees of city institutions, he said.

Government reacts

Botond Sára, the central government’s Budapest official, said the capital’s budget was “illegal and unsustainable” the moment the left-wing majority of the city assembly approved it. In a post on social media, he also said the Budapest administration’s decision to take responsibility for the Rákosrendező area of the city was “so big” that it could “imperil the city’s financial situation and operations”.

Further, he said the state treasury’s debt collection order had been legal as the courts had not ruled otherwise. He said Karácsony had turned to court but doing so in itself did not have the effect of suspending the payment into the treasury. “Anyone can have an opinion on the legality of something but the court decides in the end; it has indeed ruled several times but not in favour of the metropolitan council. The Kúria’s latest ruling is also clear: the capital’s budget is illegal,” he added.

Vitézy talks about unprecedented crisis

Dávid Vitézy, the leader of the Podmaniczky Movement, said in a post on Facebook that Budapest had entered “an unprecedented crisis”, adding that “in the current financial situation we should come together, negotiate, and look for solutions”.

He said “excessive government deductions” were behind the budget crisis. At the same time, the Kuria, Hungary’s supreme court, has ruled that the main figures of the budget must be revised and the mayor failed to nominate a deputy, “which is why the City Hall is operating unlawfully”. After scandals around public transport company BKV, the company’s chief executive resigned, he noted, “and today the chief executive of [Budapest transport authority] BKK has also quit”, he added.